Help pack a million meals for struggling seniors on 9-11. Volunteer today



Driver Safety

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

Happy African American couple

AARP Books

Visit the Books Section

Enjoy titles on retirement, Social Security, and becoming debt-free.

Jobs You Might Like

most popular


Credit Card Fees Up, Credit Limits Down

Why are bad things happening to good cardholders?

New rules in 2010

More than 60,000 cardholders have complained to the Federal Reserve about such penalties. New protections are scheduled to take effect in July 2010 that will limit what some consumer advocates deem “abusive” practices, such as credit card issuers suddenly raising rates, cutting credit lines without reason and imposing new maintenance fees. Under the new rules, for instance, interest rate hikes will require a 45-day advance notice, and rates cannot be raised on existing balances unless a payment is more than 30 days late.

Credit card companies deny that penalties on traditionally good customers, which began last year but have gone into full swing since October, are connected to the new federal regulations. “It’s a response to the increased cost of doing business in a weaker economy,” says AmEx spokeswoman Mona Hamouly. “It’s not related to any legislation.”

Chase spokeswoman Stephanie Jacobson, who declined to be interviewed or answer specific questions via e-mail, said in a written statement: “When necessary, we make changes to pricing, terms or credit lines based on borrower risk, market conditions, and the costs to us of making loans. We recognize that some of these decisions can have an impact on some customers, and we make these decisions with great care.”

What should you do?

You have choices to make, especially if you have always been a reliable credit cardholder.

* Curtail but don’t cancel. Your first reaction to recent penalties may be to close your account and take your business elsewhere. “But that could backfire and hurt your credit score—at least in the short term,” says Careen Foster, spokeswoman for FICO, a company that computes credit scores. “Opening new accounts is a sign of increased credit risk, especially in today’s economy.” And closing existing accounts, especially long-held ones, reduces your credit worthiness by increasing your debt-to-available-credit ratio. It’s better to use existing cards periodically, and forget about generating rewards, which are harder to redeem these days anyway.

* Keep balances below one-third of your limit. Just because you have a high credit limit doesn’t mean you should use it, notes Mierzwinski. “It’s no longer enough to just pay on time; your balance shouldn’t exceed one-half your credit limit, and, ideally, it should consistently be one-third or less of that.”

* Don’t consolidate. Another temptation may be to move all your existing balances to a low-rate “teaser” card. But that account can quickly max out, hurting your credit score. Your credit score will fare better if you instead pay down existing cards. If you’re making partial payments, pay off the card with the highest interest rate first while making the minimum payments on the others. That way, you minimize the amount of money you’re paying in interest.

* Complain … nicely. Credit card issuers are less likely than in the past to remove already issued restrictions, but they still do—especially for customers with a sterling past who go up the chain of command. When Citibank suddenly issued a double-digit interest rate hike on Mierzwinski, he complained to a supervisor that he always pays his balance in full and well before the due date, and was issued an interest rate lower than his previous one.

Sid Kirchheimer covers consumer and health issues for the AARP Bulletin.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts


Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.


The Cheap Life

Jeff Yeager Cheap Life Ultimate Cheapskate AARP YouTube web series save money

Catch the latest episode of The Cheap Life starring Jeff Yeager, AARP's Ultimate Cheapskate. Watch

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Member Benefits HomeServe

Members can protect their homes with comprehensive repair plans from HomeServe.

AARP Credit card from Chase

Members can get cash back rewards on purchases with the AARP® Credit Card from Chase.

Woman holding smartphone in city, Google map tool

Members can find discounts on the go via the AARP® Member Advantages Offer Finder app.

Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.

Rewards for Good

Your Points Balance:

Learn More

Earn points for completing free online activities designed to enrich your life.

Find more ways to earn points

Redeem your points to save on merchandise, travel, and more.

Find more ways to redeem points


Advance your skills. Transform your career.

Explore your learning possibilities.